Canadian NGV Market Poised for Expansion

Canada’s natural gas vehicle market has been relatively slow to develop but that may be about to change. Canada is well endowed with 300 years of natural gas reserves and is the home of leading NGV technology and dedicated NGV proponents. A new Natural Gas Solutions document from Canadian Gas Association and advocacy and leadership from the Canadian Natural Gas Vehicle Alliance are raising awareness of natural gas as a potential major contributor to the nation’s environmental objectives.

Abundant Canadian Natural Gas

Canada is the world’s fifth-largest producer of natural gas. However, as stated by Forbes, “In this booming age of natural gas, high-resourced Canada has seen flat production and demand over the past decade”. Its natural gas market is heavily integrated with those of the U.S. largely due to the location of supply basins, demand centres, and the availability of transportation infrastructure, as well as existing Canada – U.S. trade agreements. The Government of Canada’s National Energy Board (NEB) reports that natural gas exports from all Canadian sources in 2018 declined by 6% compared to 2017, with almost all of that gas going across the border. Furthermore, NEB predicts that southern market to become “negligible” by 2040. This situation lends impetus to explore new export markets by way of shipped LNG, but also to look at ways to stimulate domestic consumption.

Canada is well prepared to create a nationwide network for natural gas vehicle refuelling. Already, there are the beginnings of refuelling highways on major eastern trade routes. Canada also has more than 550,000 kms of natural gas transmission and distribution pipeline. Large areas of northern Canada are not connected but the advent of virtual pipelines, liquefied natural gas and mobile refueling solutions in recent years means NGVs can and do operate anywhere in Canada.

CGA’s 2019 Natural Gas Solutions

CGA, as part of its visionary 2019 Natural Gas Solutions paper (issued April 2019), states this clean burning fuel produces minimal NOX, SOX and particulate matter emissions. It also generates up to 25 per cent lower greenhouse gas emissions.

Amongst a raft of recommendations in its 2019 iteration, CGA recommends to “Drive transportation cost and emissions reductions by:

ensuring that regulatory initiatives for the transportation sector recognize the importance of natural gas vehicles (NGVs);

providing up-front funding for fleets to defray a portion of incremental costs associated with the purchase of NGVs and to de-risk investment;

providing funding to assist in the development of key refueling infrastructure – on highways, at ports and at rail depots – to encourage more fleet operators to switch; and

The federal government is developing a proposal to create a national Clean Fuel Standard (CFS), using a regulatory approach to encourage emissions reductions from all forms of combustion – including transportation. The overall objective of the proposal is to achieve annual reductions of 30 megatonnes (Mt) of GHG emissions by 2030. “The standard will incent the creation of lower carbon fuel pathways and drive technology and innovation to achieve the desired outcomes. It will be non-prescriptive and designed to provide maximum flexibility to fuel suppliers, and will include a market-based approach, such as a crediting and trading system.”

CNGVA is concerned that the principles of “non-prescriptive” and “maximum flexibility” remain intact as the proposal works its way through the regulatory approval process. These concerns arise after the 2019 federal budget “ignored all of the current and future realities of the energy and transportation industry in favour of voter accessible slogans and boutique funding. Our industry will have work hard to reach past elected politicians and appeal directly to Canadians so that the latter can better understand how and where natural gas benefits them,” Winchester said.

As Winchester optimistically observes, the CFS “could be the most significant federal measure in support of natural gas vehicles in Canada”.

Incentives and Policies

In the meantime CNGVA continues to lobby the government to offer some funding incentives aimed at fleets. NGV Global asked CNGVA about how actively involved are the various in-nation governments.

Winchester: “At the provincial level, support is varied. Some provinces are prepared to offer direct support for fleets that switch to natural gas. There are others that are less willing to spend program dollars, but are willing to use regulations to remove barriers and encourage fleets to switch.

“By contrast the federal government to date has offered modest support in the form of the deployment Roadmap and related programs – including support for developing key refuelling infrastructure – and is developing regulations – like the CFS – that may encourage greater adoption of NGVs.”

“In the upcoming elections, CNGVA will be encouraging all federal parties to support the deployment of NGVs. Greater use of NGVs in Canada are a low cost solution to reduce emissions – and in particular can help reduce emissions in the transportation sector which is Canada’s second largest source of GHGs. Indeed, NGVs for medium and heavy duty transportation can reduce GHG emissions on a 2 to 1 ratio when contrasted with zero emissions passenger vehicles – it takes two Tesla cars to displace the equivalent GHGs that result from one NGV refuse or class 8 truck.”

Second Issue NGV Roadmap

Adding to the weight of argument for a stronger NGV market will be a soon-to-be-published second Canadian NGV Roadmap, a joint government-industry initiative that will bolster the case for NGVs. CNGVA was a major contributor to the 2010 NGV deployment roadmap Natural Gas Use in the Canadian Transportation Sector. Facilitated by Natural Resources Canada, that publication brought together stakeholders to discuss the potential for natural gas use across the medium- and heavy-duty transportation sector, explore strategies for overcoming barriers associated with its use, and develop recommendations for deployment.

Winchester points out that much has changed over the intervening years. When the roadmap was published in 2010, outside of a couple of transit fleets, the idea of using natural gas for the medium and heavy sector was just emerging from the test phase; today there are many Canadian fleets successfully operating medium and heavy duty NGVs. Available original equipment manufacturer engine offerings have increase to three models ranging from 7 litres to 12 litres of displacement. Use of LNG in the marine market has also emerged, with three ferry operators and one commercial operator now using LNG fueled vessels in Canadian waters.

Aside from the technology improvements, a new focus on emissions reductions has re-energized the discussion and has changed the cost benefit analysis in favourable ways. Timely publication of an updated Roadmap will assist Canadians to more fully appreciate the potential for using natural gas fueled transportation over a broad range of on-road, off-road (e.g. mines), rail and water applications. Winchester notes: “Armed with the insights of several years of in-market experience, the revised roadmap will showcase successful fleet deployments, emphasis the emissions and costs savings that are possible, and chart an effective course to deploy more NGVs in Canada over the next decade.”

Lessons from Europe’s Pathway

In 2014, CGA published the Renewable Natural Gas Technology Roadmap for Canada. It states: “In the transportation sector, renewable natural gas offers an interesting opportunity in that not only can it be blended or used as the exclusive fuel in various forms (CNG or LNG), it has the highest energy conversion of feedstock–to-fuel of the currently available sources of renewable transportation fuels.” It goes on to recommend exploration of the use of RNG for vehicles.

The European experience will be most useful in this regard. NGVA Europe recently urged co-legislators of the European Parliament and Council to make appropriate inclusive decisions as they sought final agreement on the new regulation setting CO2 standards for Heavy Duty Vehicles. They argued that a mechanism for inclusion of renewable and synthetic fuels in the range of alternatives to reach the final CO2 reduction targets was fundamental to a fair market. The European Parliament subsequently adopted a reform of the Clean Vehicles Directive (CVD) on April 18. It will incentivise the market for zero- and low-emission vehicles by encouraging their use in public procurement.

“During the negotiations, the benefits of the use of natural gas as transport fuel to achieve local air quality objectives has been recognized”, commented Andrea Gerini, Secretary General of NGVA Europe after the CVD reform was adopted. “This should encourage cities and municipalities to include gmobility as cost-effective solution to renew their fleets. Natural gas vehicles contribute to increase air quality in cities, especially reducing NO2 and PM/PN. On top of this, thanks to renewable gas, gmobility offers an easy way to accelerate the decarbonisation process.”

A commitment by governments of Canada, and from other countries too, toward a fair and balanced market-based approach to a cleaner fuel future will help counter the almost religious fervour for electricity as the panacea for transport-related emissions. CGA points out that “federal, Quebec and British Columbia governments have shown leadership in the past with an investment in RNG projects in Saint-Hyacinthe, Quebec and Surrey, British Columbia. Both projects are currently producing and delivering renewable natural gas.”

“Optimism, determination and convincing argument will lead to a supportive policy environment, renewed investment, and an educated marketplace aware of the benefits offered by utilising natural gas as a fuel for transportation,” Winchester concludes. “CNGVA, CGA and industry stakeholders have those attributes in abundance.”